Wednesday, 20 November 2013 05:16

Digital media players adapt to changing market


A market driven by a younger age group, including a significant rise in the use of smartphones and tablets, is having a major impact on Australia’s digital media market players.

According to a new research report from Frost & Sullivan, as well as a big rise in smartphone and tablet use, there is also tremendous growth in online retail and a surge in the online advertising and video market.

Australians, particularly the younger ones, are impacting the market for the major media players and the messages they send out to their target audiences.

“Common patterns such as younger age group markets dictating new directions and methods though their preferences and demands impact the way messages are transmitted to them,” says Phil Harpur, Senior Research Manager, Australia & New Zealand, Frost & Sullivan.

Often a multi-prong communication strategy is required as connectivity and mobility are ubiquitous trends impacting many of these markets.”

Harpur says Frost & Sullivan has identified the top six predictions in digital media that are expected to be game changers, “challenging market players to up the ante and be a step ahead of the competition.”

Here’s the six predictions:

1.      Android  will  continue  to  take  market  share away from Apple in the
   smartphone market

Up till two years ago, Apple dominated Australia’s smartphone market. In 2012, Android and Apple held equal market share (44%). In 2013, Android (50%) overtook Apple iOS (39%) as the most popular smartphone operating platform, and is continuing to capture market share.

HTC, ARM, Motorola and Samsung, which in particular has grown its market share significantly over the past 12 months, all use Android operating systems. Smartphone ownership levels in Australia were at 73% penetration of the 15 to 65 age group in 2013, compared to 68% in 2012. By 2018 Frost & Sullivan predicts that virtually all mobile phones will have smartphone
functionality built-in and penetration amongst the 15 to 65 year old age group will reach 93%.

By 2017, Apple’s market share of smartphones is predicted to be less than 30%. Market players will improve functionality at cheaper price points, and smartphone prices will continue falling. Business models will be based on apps, as device sales margins decline.

2.      Tablets will further become mainstream consumer devices

Australia’s  tablet  ownership  amongst  the  15  to  65 year old age group increased  from  20%  in  2012  to 31% in 2013. Tablet ownership is highest amongst the 35 to 44 age group. Tablet household penetration, or households where at least one member owns a tablet, rose from 33% in 2012 to 49% in 2013 and will reach 80% in 2018. Adoption rates are stimulated by more
manufacturers, such as Samsung, selling tablets at lower price points.

Mobile devices now are multi-functional with usage centered around mobile media capabilities.  Smartphones  and  tablets  though primary devices forvoice   communication   and  information  consumption,  offer  a  range  of applications  for communications, productivity, learning, entertainment and gaming.

77% of Australian tablet owners play games at least once a month on their tablet. 67% of tablet owners access social media via an app at least once a month and 60% perform mobile banking.

Viewing of online video is expected to increase significantly over the next five years, especially in the home environment as more consumers watch video content on tablets in preference to TVs. As tablet sizes and weights reduce, tablets will become more portable, increasing usage whilst consumers are on the move.

Apple’s iPad dominates the tablet market, both locally and internationally, but other vendors are fast gaining ground. Apple’s tablet market share in Australia dropped from 69% in 2012 to 60% in 2013 and by 2018 is predicted to drop to less than 40%, as an increasing number of vendors enter the market with cheaper price points.

3.      Strong momentum in the Australian mobile advertising market will

The mobile advertising market grew over 100% in 2013. A similar growth rateis predicted for 2014, driven primarily by high penetration rates of smartphones and tablets. Use of mobile devices multi-functions centered around mobile media capabilities, in particular, access to web browsing and apps, is driving many opportunities for advertisers.

Agencies and brands have become very aware and accepting of the importance and effectiveness of mobile advertising. There is higher demand for premium mobile ad solutions, now regarded as an essential part of an integrated advertising campaign buy covering both traditional / offline channels and online channels.  More retail companies are integrating mobile advertising
into their advertising campaigns.

Australia is among the leading nations for rich media ad production and rich media ad formats will continue to grow strongly. A high proportion of rich media are entering the Australian mobile advertising market. Australia’s fast 3G and 4G mobile networks and high penetration of smartphones and tablets, makes for an ideal environment for the creation of
rich media content by online publishers and mobile agencies. Mobile ad networks / agencies such as Big Mobile, InMobi and MobeSeek produce the majority of their new inventory using rich media.

4.      More online video ad inventory will be traded via ad exchanges

An estimated 30% to 35% of online video ad buying is purchased via programmatic methods in Australia. By end 2014, this will exceed 40%. The majority of this ad inventory is of non-premium / remnant inventory. Most premium ad inventory sold by publishers is via clients rather than through ad exchanges. Due to the increasing adoption of private video ad exchanges,
online publishers have some control over the ad buying process, enabling them to manage the rules as to how inventory is sold and controlling which buyers are invited to participate in the exchange. Online publishers will move a higher proportion of the ad buying to private ad exchanges during 2014.

The Australian market for ad buying via ad exchanges is relatively mature. The video ad buying market has progressed significantly over the last 12 months.  Video ad exchanges now play an important part in the video ad market ecosystem. There is less distinction between traditional roles of a video ad platform/exchange and a video ad network. A number of video ad
networks such as TVN, TubeMogul, Volt Media and Adap.TV now participate in the ad exchange market by essentially operating as Demand Side Platforms
(DSPs) or Supply Side Platforms (SSPs).

5.      Online video will make significant inroads into the broadcasting and Pay
   TV markets

Australia’s online video market is being driven by the growing popularity of mobile devices and tablets and boosted by the preference of younger consumer age groups towards online video channels as a direct substitute for traditional TV.

In 2012, 94% of consumers watched TV shows and/or movies on a TV screen at least once month. In 2013 this declined to 87% and is expected to drop to 80% in 2014.  Meanwhile, the frequency of consumer viewing on tablets and smartphones increased from 20% in 2012 to 24% in 2013. 27% of smartphone users  watch  user generated content on sites such as YouTube on most days, while  60%  do  so  at  least  once  a  month. Larger and higher resolution smartphone  screens  have  improved  the  viewer  experience significantly,whilst  monthly  data  cap  limits  offered  by mobile operators have risen significantly.

Live and sporting events and news will be a key driver in taking the online video experience to a mainstream audience. For example, watching live news on  devices while commuting on a train is becoming more common and offers a real  substitute to the TV lounge room viewing, Video content producers and production  houses  are  increasingly  releasing  content  directly  to the consumer,  rather  than  releasing the content only via the TV broadcasting and/or  pay  TV  networks.  This  growing  market  trend  poses  a level of competitive  threat  to  the  stranglehold that the major free-to-air (FTA)
broadcasters have on the consumption of video content in Australia.The Voice Australia, and sporting shows V8 Supercars and AFL TV are such examples, and more direct to the consumers releases like these will be seen during 2014.

6.      Mobile commerce will continue high growth

Smartphones and tablets have extended the Australian online shopping experience for both consumers and retailers. Mobile commerce providesconsumers with a channel to shop at home and whilst on the go, and is used as a tool in the overall shopping process. 52% of smartphone users have used their smartphone to find a nearby store; 38% have used it to compare prices.  Location Based Services can be used to geo-locate customers and send them offers as they are passing a store, encouraging them inside and stimulating purchase. Location Based Services are still not widely available in Australia but more services will be released in 2014.

In 2013, purchases via mobile devices, ie., smartphones and tablets grew by 30%, accounting for $4.9 billion or 27% of all online shopping purchases. Online spending on tablets increased from 5% in 2011 to 8% in 2012 and 10% in 2013. Purchases via mobile devices are predicted to grow strongly in 2014, growing by 27% and predicted to reach $14.1 by 2017, growing at a
CAGR of 30% over the next four years.


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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).



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